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Dropbox Chooses Investor Group, Valuation Set at $5+ Billion

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Re: Dropbox Chooses Investor Group, Valuation Set at $5+ Billion

#11

Post by ThomPete »

rubyrescue wrote: post #9
johnrob wrote: post #6

I'm somewhat surprised that a file sharing company can get a valuation this large. Don't get me wrong, the product is great, but I'm skeptical that the "file sharing industry" is big enough for valuations like this. Some quick math: A 5 billion valuation implies earnings of at least 250 million/year. Assuming paying customers are worth 240/year and represent 5% of the user base, dropbox would need roughly 21 million…

21 million seems pretty easy to achieve to me worldwide; every one of my social circles and peer groups, both technical and non-technical, in the US and South America, seem to use dropbox. my parents love it. my wife is non-technical to a fault and can't live without it; she just paid for the upgrade to 100gb because it represents safetey to her of her photos. even my under 10 year old son knows that saving in dropbo…

Just until windows and apple both offer the service. Apple is already on the way with iCloud.

Re: Dropbox Chooses Investor Group, Valuation Set at $5+ Billion

#12

Post by Havoc »

johnrob wrote: post #6

I'm somewhat surprised that a file sharing company can get a valuation this large. Don't get me wrong, the product is great, but I'm skeptical that the "file sharing industry" is big enough for valuations like this. Some quick math: A 5 billion valuation implies earnings of at least 250 million/year. Assuming paying customers are worth 240/year and represent 5% of the user base, dropbox would need roughly 21 million…

Agreed. My first reaction was "way too high". The problem imo is that they don't have a huge edge over the competition. Hell even Ubuntu has a semi comparable product. Not quite as user-friendly, but do a few easily duplicated UI difference really justify billions?

Re: Dropbox Chooses Investor Group, Valuation Set at $5+ Billion

#13

Post by sfoguy »

johnrob wrote: post #6

I'm somewhat surprised that a file sharing company can get a valuation this large. Don't get me wrong, the product is great, but I'm skeptical that the "file sharing industry" is big enough for valuations like this. Some quick math: A 5 billion valuation implies earnings of at least 250 million/year. Assuming paying customers are worth 240/year and represent 5% of the user base, dropbox would need roughly 21 million…

I really, really don't understand this valuation.

But I also don't understand why MS and Apple are not pushing their own services more aggressively. And Google could add that in a month (I guess they still have the GDrive code somewhere)... good for dropbox ;)

Re: Dropbox Chooses Investor Group, Valuation Set at $5+ Billion

#15

Post by alain94040 »

fourspace wrote: post #8
pg wrote: post #4

Earlier quoted context omitted.

What in the article celebrates funding as success?

I admit, my post was an overreaction. My concern, and the reason I've stopped reading TC, was that we're in a culture that celebrates VC funding as some sort of business success. It's a milestone, but it's not success (in my eyes, anyway). Real success, which Dropbox certainly has reached, is when you build a sustainable company where your customers pay you for providing value, not investors. Investors eventually wan…

Fair enough. But funding is one of the few publicly visible milestones that a startup can achieve. One could argue that it's almost a proxy for success.

Either that or we should all get excited with a press release from Dropbox saying they reached 10 million users. But that doesn't excite geeks (do you care if Apple sold 20 million iPhones this month? No, you care about the iPhone 5).

Re: Dropbox Chooses Investor Group, Valuation Set at $5+ Billion

#16

Post by rokhayakebe »

Sometimes I feel like there is a little jealousy among the startup community which translates into I like this, but the valuation is absurd.

Dropbox could be worth that much, I believe. Some say their business is not defensible because anyone else can build a similar product for free. Well until someone has, nobody has.

Re: Dropbox Chooses Investor Group, Valuation Set at $5+ Billion

#17

Post by heynk »

Havoc wrote: post #12
johnrob wrote: post #6

I'm somewhat surprised that a file sharing company can get a valuation this large. Don't get me wrong, the product is great, but I'm skeptical that the "file sharing industry" is big enough for valuations like this. Some quick math: A 5 billion valuation implies earnings of at least 250 million/year. Assuming paying customers are worth 240/year and represent 5% of the user base, dropbox would need roughly 21 million…

Agreed. My first reaction was "way too high". The problem imo is that they don't have a huge edge over the competition. Hell even Ubuntu has a semi comparable product. Not quite as user-friendly, but do a few easily duplicated UI difference really justify billions?

Justifying billions is of course a stretch, but having a really, really smooth UI definitely does make a difference. Its easy to underestimate these things in favor of technological advantages, which dropbox doesn't really have compared to every other personal file hosting site. But normal people really don't know/care about that, for them all that matters is an easy UI that just works. And dropbox does just that, IMO better than any others

Re: Dropbox Chooses Investor Group, Valuation Set at $5+ Billion

#18

Post by sdizdar »

johnrob wrote: post #6

I'm somewhat surprised that a file sharing company can get a valuation this large. Don't get me wrong, the product is great, but I'm skeptical that the "file sharing industry" is big enough for valuations like this. Some quick math: A 5 billion valuation implies earnings of at least 250 million/year. Assuming paying customers are worth 240/year and represent 5% of the user base, dropbox would need roughly 21 million…

I believe that everybody will have a least one "cloud storage" account. Actually probably multiple "cloud storage" accounts since cloud storage providers will try to specialize and differentiate (i.e., you will have Google Docs account, Dropbox account, iCloud account, etc.). So 21M is a conservative number.

And don't forget companies of all sizes are going into cloud: so replace 21 million users with 21 millin users via their employeer. (Ever tried sharing documents using MS SharePoint?)

Re: Dropbox Chooses Investor Group, Valuation Set at $5+ Billion

#19

Post by olivercameron »

johnrob wrote: post #6

I'm somewhat surprised that a file sharing company can get a valuation this large. Don't get me wrong, the product is great, but I'm skeptical that the "file sharing industry" is big enough for valuations like this. Some quick math: A 5 billion valuation implies earnings of at least 250 million/year. Assuming paying customers are worth 240/year and represent 5% of the user base, dropbox would need roughly 21 million…

Dropbox already has 25 million[1] users.

1. http://techcrunch.com/2011/04/17/dropbox-hits-25-millions-us...

Re: Dropbox Chooses Investor Group, Valuation Set at $5+ Billion

#20

Post by gduffy »

johnrob wrote: post #6

I'm somewhat surprised that a file sharing company can get a valuation this large. Don't get me wrong, the product is great, but I'm skeptical that the "file sharing industry" is big enough for valuations like this. Some quick math: A 5 billion valuation implies earnings of at least 250 million/year. Assuming paying customers are worth 240/year and represent 5% of the user base, dropbox would need roughly 21 million…

1. Why is a 20x P/E ratio appropriate for a high-growth tech startup?

2. http://tech.fortune.cnn.com/2011/04/18/reviewing-dropboxs-vi...

3. File sharing is, like, what the Internet was originally invented for. Quite a few people use the Internet (>1billion), and it's still hard to share a photo album with your family.

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